Zinc near 3-month high on stocks, $US fall

Zinc and copper prices have touched a near three-month high as the US dollar lost its lustre, while zinc also benefited from a decline in exchange stockpiles.

Benchmark zinc on the London Metal Exchange closed 1 per cent higher at $US2,747 per tonne while copper ended up 1.1 per cent at $US5,858. Both metals earlier touched their highest since April 7.

"Fundamentally zinc is very strong," Sucden Financial analyst Kash Kamal said, adding that the technical picture also suggested further upside for zinc prices.

DOLLAR: Industrial metals helped by a softer US currency, which makes dollar-denominated metals cheaper for non-US firms when it falls, potentially boosting demand.

STEEL: Chinese iron ore prices surged 6 per cent to one-month highs in a late burst of short covering and fresh buying that lifted steel and raw materials as investors bet on rising demand.

STOCKS: Cancelled warrants -- zinc earmarked for delivery -- at more than 70 per cent of LME stocks at 299,875 tonnes are fuelling concern of a tight LME market. Total stocks at eight-year lows are also down 35 per cent since October.

CHINA ZINC: Premiums for zinc held in China's bonded zones are near their highest levels this year at $US195-$US200 from about $US130 earlier this year.

ZINC SPREAD: The discount for cash over the three-month contract has narrowed to near zero from around $US20 a tonne on June 12, another sign of a tighter LME market.

TECHNICALS: Resistance for zinc is around $US2,770, a Fibonacci level, said Marex Spectrons's Alastair Munro.

NICKEL: LME nickel ended up 2.5 per cent at $US9,260, its highest daily percentage jump in nearly three months.

PHILIPPINES: The nickel market is watching the Philippines where the environment minister may decide next month on the fate of dozens of mining operations and contracts that his predecessor ordered closed, suspended or cancelled.

JAPANESE ALUMINIUM: Japanese aluminium buyers have agreed to pay producers a premium of $US118 to $US119 per tonne for metal shipped during the July to September quarter, five sources directly involved in the pricing talks said.

ALUMINIUM: Benchmark aluminium ended up 1.1 per cent to $US1,882, rebounding after touching its lowest in over three months on Monday.

PRICES: Tin was flat at $US19,280 and lead rose 1.4 per cent to $US2,286.